Facebook’s (NASDAQ:FB) first earnings report as a company may not be as disastrous as Zynga’s (NASDAQ:ZNGA). But it’s still a disaster. In after-hours trading, the stock is off by 10% to $24. And that’s after the shares had already been down by 8.5% during regular trading.
At first glance, the quarter looked OK. Revenues rose by 32% to $1.18 billion, and earnings came to 12 cents (excluding stock charges). This was somewhat better than the Wall Street consensus, which called for revenue of $1.15 billion and earnings of 12 cents a share.
Adding to the excitement, Mark Zuckerberg showed up on the conference call. In his statement, he made it clear that mobile was the No. 1 priority at Facebook. He pointed out that “sponsored” stories were at a run-rate of $1 million per day (as of June), with about half coming from mobile devices.
So, why are investors dumping the stock? It could be that they wanted to get some level of earnings guidance, at least for the next quarter. Another concern has been the continued escalation in costs. Consider that capital expenditures spiked by 213% to $413 during the quarter. According to CFO David Ebersman, the pace will continue into the second half of the year.
But there’s another issue: the lock-up expiration. This is when employees and investors have the right to sell shares. For Facebook, it occurs on Aug. 17, and it will involve 217.1 million shares. That could put more pressure on the stock within the next few weeks.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of the upcoming book How to Create the Next Facebook: Seeing Your Startup Through, from Idea to IPO. Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.